Can producer currency pricing models generate volatile real exchange rates?

If the elasticities of substitution between traded and nontraded and between Home and Foreign traded goods are sufficiently low, then the real exchange rate generated by a model with full producer currency pricing is as volatile as in the data.

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Year of publication:	2012
Authors:	Povoledo, Laura
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 116.2012, 3, p. 436-439
Publisher:	Elsevier
Subject:	Real exchange rate volatility \| Producer currency pricing \| Elasticity of substitution \| New open-economy macroeconomics

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Type of publication:	Article
Classification:	F41 - Open Economy Macroeconomics ; E32 - Business Fluctuations; Cycles
Source:	RePEc - Research Papers in Economics

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